I am very fond of Zillow (www.zillow.com), a site that provides value estimates for houses around the country. It combines real estate voyeurism with lots of data and satellite maps, so I spend way more time on it than I should.
Beyond the fact that Zillow is fun, it is honest. It presents information on how accurate its estimates of home values are in a very user-friendly manner. First, it gives market statistics on accuracy at http://www.zillow.com/howto/DataCoverageZestimateAccuracy.htm. Two stats are key here--the median error Zillow makes when it estimates value, and the share of value estimates that are within 10 percent of ultimate sales price.
Second, it gives an range of estimates values for any particular house. While I have not been able to find exactly how Zillow comes up with this range, my reading between the lines suggests that it is the Zillow estimate of value plus or minus one standard deviation. What this means is there is about a two-thirds chance that a house will actually sell within the range of values reported on Zillow (if anyone has the scoop on this, please let me know).
I am reasonably sure one thing is true--more generic houses get more accurate values from Zillow than ideosyncratic houses. Have fun, and let me know what you think about how well Zillow values your house.
Richard,
ReplyDeleteYour blog is great and very insightful. I agree with you that ZILLOW is a great tool that equalizes what I believe to be the "non-scientific" processes realtors, and home owners undergo when pricing their homes for sale. From my experience, I wonder if most home buyers still believe the 'realtor' provides and enormous value-added service to the process of selling their home. Granted, a realtor still lists a home on the MLS and might engage in 1 or 2 open houses. However, in my opinion, tools like ZILLOW, ZipRealty.com and others have minimized the actual value a realtor brings to the equation. If you think about it, an average home in the DC/VA/MD sells for $500,000, using the traditional 3% commission earned by a realtor, this means this entity (realtor, broker etc) would earn $15000 per sale.. In the market that we have been experiencing in the past 5-7 years this price is VERY conservative, and therefore the earnings of realtors has proved to be quite lucrative. As such, many many individuals have flocked to the industry creating gluttony of realtors. (this is similar to what occurred in the late 90s with the dot.com panacea. Everyone suddenly was in e-business, and then when the deluge of the dot.com bubble burst everyone was massacred.) Will this happen in Real Estate I wonder. But one thing is for sure, Zillow.com and other such tools will make it harder and harder for non value-added realtors to continue playing the game. (Disclaimer: I don't personally have anything against realtors, this is just a commentary.)
Great explanations and thanks for the info
ReplyDeleteReal Estate Professional